Examining the ISIS Oil Business

— -- On Wednesday, as part of President Barack Obama's plan to "systematically degrade, dismantle and defeat" the Islamic State of Iraq and Syria (ISIS), the U.S. Treasury Department said that it would step up pressure on the extremist group's illicit oil sales.

In a blog post that day, David Cohen, the department's undersecretary for terrorism and financial intelligence, said that the "Treasury is committed to ensuring that [ISIS] is unable to access the international financial system."

The value of the ISIS oil trade has been widely estimated at $1 to $3 million per day, though experts have warned that the figure could be a high estimate. It comes from crude gathered in oil fields across ISIS-held territory in Raqqa and Deir Ezzor provinces; then it's trucked into Turkey and Iraqi Kurdistan, or sold to vendors in regime-held areas.

We asked Richard Mallinson, head of international affairs and energy policy at Energy Aspects, to weigh in on the ISIS oil economy, how far it can reach, and how sustainably it might last.

Syria Deeply: How accurate is the widely reported $1 million-per-day number?

Richard Mallinson: It's difficult to get reliable information about domestic markets within the Middle East even before they become black markets. But the headline numbers widely quoted in the press – on how much money ISIS might be generating through the oil black market – are too high. The most common figure quoted is $1 million a day, based on original analysis that was done by the Iraq Oil Report. That was very speculative – and at the time, they were very clear on that – but now it's entered the media's narrative. And there are a few reasons why that number is questionable.

One reason is that we don't know what type of volume is moving, because the original Oil Report analysis referenced a source saying there were up to 100 trucks full of oil loaded from ISIS territory and sold per day. There are questions about how reliable that source is. That figure was also given early on, just after ISIS had taken control of fields in Iraq and before there had been much international attention to this issue of oil smuggling.

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Even if that was the case – even if the number of trucks was as high – it will have fallen quite a bit by now. I don't think ISIS has the capability to maintain production on these oil fields at anywhere near that capacity. And the neighboring countries these trucks were moving towards –Turkey and Iraqi Kurdistan – will have tightened up their border checkpoints. A smaller number of oil cargos are still being sold, but I'm skeptical about both the scale of the trade and the amount of revenue that's coming into ISIS's coffers.